“Politics takes up 80% of my time” declared Kieran Holmes, Commissioner General of the Office Burundais des Recettes (OBR), speaking at an event in London hosted by Africa Research Institute which examined how tax collection and administration has been reformed in one of Africa’s poorest nations.

“It is not in everybody’s interest that the OBR does its job with efficiency and transparency. That is why the OBR could not do its job without uncompromising support from President Nkurunziza and his two deputies”, added Holmes.

The support and encouragement for OBR at the highest level was compared with Rwanda where the revenue authority was able to increase the tax-take by 700% in 2002-2010 – in part due to the resolute backing of President Kagame.

Kieran Holmes was joined on the panel by Domitien Ndihokubwayo, Deputy Commissioner General and Commissioner of Customs and Excise at the OBR, Chantal Ruvakubusa, Commissioner of Domestic Taxes and Non-Fiscal Revenues at the OBR, and Professor Mick Moore, Chief Executive of the International Centre for Tax and Development at the University of Sussex.

“Over 30 years, a practice developed in Burundi where people did not pay taxes, or they paid as little tax as possible. Then a new administration came along and asked people to pay more to the government in the form of taxation. It is understandable that some people resist. It is our job to explain to people that things have changed, and to put in place clear procedures for paying taxes”, said Dr Ndihokubwayo.

Despite some controversy surrounding the creation of the OBR, tangible results have been achieved. In 2012, tax revenues were 75% higher than in 2009 – a 25% increase in real terms. The contribution of tax to GDP had risen from 13.8% in 2009 to 16.7%. “In general, revenue authorities are better than governments at explaining to people and businesses why they should pay taxes”, noted Mick Moore.

The event marked the publication of Africa Research Institute’s latest report “For State and Citizen: Reforming revenue administration, in Burundi”, in which OBR’s senior management describe in detail the measures taken to reduce corruption, improve services, implement legislative reforms and widen the tax base. The authors make clear that the continued success of the OBR depends on a favourable political, business and legislative climate.

Notes to editors:

Africa Research Institute is an independent, non-partisan think-tank based in London. Our mission is to draw attention to ideas and initiatives that have worked in Africa, and identify new ideas where needed.

Tax is high on the agenda in Africa. At an international level, advocacy groups and the G8 have called for greater efforts to counter tax evasion and avoidance by multinational companies. But in many countries in sub-Saharan Africa, a similar – and arguably even more pressing – campaign is being waged to improve the capacity of the state to collect domestic revenues.

In Burundi, the prospects for improving tax administration could not have been more inauspicious. By 2009, following the cessation of a civil war that claimed more than 200,000 lives, Burundi’s GDP per capita was the lowest in the world at US$150. Four-fifths of the population subsisted below the US$1 income per day poverty line. The Transparency International East African Bribery Index listed Burundi as the most corrupt country in the region. The country’s tax department was named as the most corrupt institution.

Despite the signally inhibitive outlook, the government implemented a number of measures to improve financial management. These included the creation of a new semi-autonomous revenue authority – the Office Burundais des Recettes (OBR). In 2012, tax revenues were 75% higher than in 2009 – a 25% increase in real terms. The contribution of tax to GDP had risen from 13.8% in 2009 to 16.7%.

In this Policy Voice, the OBR’s senior management describe in detail how tax collection and administration has been reformed in one of Africa’s poorest nations. Their account highlights the actions taken to reduce corruption, improve services, implement legislative reforms and widen the tax base.

The authors are candid about the difficulties confronting the OBR. Among other things, tax exemptions remain too high and the costs of taxing much of the informal economy outweigh any financial benefit. The establishment, and continued success, of an efficient revenue authority is dependent on a favourable political, business and legislative backdrop.

Tax reform is about more than simply raising revenues for central government. Higher revenue will be essential for the health of the public purse. However, the judicious deployment of public funds will be critical for building a viable democracy in Burundi.